securities fraud – Shoals Insider

Michigan Man Arrested for Alleged Violations of Alabama Securities Act

Staff — Fri, 03 Mar 2017 16:22:35 +0000

MONTGOMERY-Authorities announced that Robert Craig Rudder of Warren, Michigan, was arrested on Feb. 28, 2017 by the Special Operations Unit of the Warren, Michigan Police Department, under the direction of Deputy Commissioner, Matthew Nichols. Rudder’s arrest stems from an October, 2016 Jefferson County, Alabama Grand Jury indictment charging him with multiple violations of the Alabama Securities Act. Rudder is currently in custody in Michigan, under a $130,000 bond, pending extradition to Jefferson County.

The Grand Jury indictment charged Rudder with eleven total counts, including one count of Conspiracy in the Fraudulent Sale of Securities; six counts of Sale of Securities by an Unregistered Agent and the Sale of Unregistered Securities; and three counts of Fraud in Connection with the Sale of Securities (making untrue statements of material fact or omitting to state a material fact), and one count of employing a device, scheme or artifice to defraud investors. The securities registration charges are Class C felonies, punishable by possible imprisonment from one year and one day to 10 years and not more than a $15,000 fine per charge upon conviction. The remaining charges are Class B felonies, punishable by possible imprisonment of from two to 20 years and up to a $30,000 fine per charge upon conviction.

The indictment and arrest of Rudder alleged illegal securities transactions involving shares of stock in Omega Pharmaceutical, Inc. ASC records indicated that Rudder was not registered with the Commission to lawfully offer and/or sell securities within, into or from Alabama; and that stock shares of Omega Pharmaceutical, Inc. were not registered with the Commission as required by law.

The ASC cautions potential investors to thoroughly scrutinize and research any investment opportunity or offer. Contact the ASC with inquiries concerning securities broker-dealers, agents, investment advisers, investment adviser representatives, financial planners, registration status of securities or debt management programs, to report suspected fraud or to obtain consumer information. The ASC provides free investor education and fraud prevention materials in print, on our website and through educational presentations upon request.

Alabama Man Indicted for Alleged Securities Fraud

H. Wayne Nix — Wed, 06 Jul 2016 18:25:59 +0000

MONTGOMERY, ALABAMA (July 6, 2016) Lyn Head, District Attorney for the 6th Judicial Circuit, Tuscaloosa County, Alabama; and Joseph Borg, Director of the Alabama Securities Commission (ASC) announced that on June 15, 2016, Terry Earl Hester, of Banks, Alabama turned himself in to the Tuscaloosa County Jail, based on an arrest warrant issued after the April 2016 Tuscaloosa County Grand Jury returned a six-count indictment for alleged violations of the Alabama Securities Act. Hester was released after posting a $90,000 bond.

The indictment charges Hester with one count of Sale of Unregistered Securities and one count of Sale of Securities by an Unregistered Agent; each of which are Class C felonies, carrying a range of punishment from one year and one day to 10 years’ imprisonment and a fine of up to $15,000 per charge, upon conviction. Additionally, the indictment charges Hester with four counts of Fraud in Connection with the Sale of Securities for making untrue statements of, or omitting to state, material facts to an investor; for engaging in an act, practice or course of business which operates as a fraud or deceit upon an investor; and for employing a device, scheme or artifice to defraud an investor. Each of the securities fraud charges are Class B felonies, punishable by not more than 20 years or less than 2 years imprisonment and a fine of not more than $30,000 per charge, upon conviction.

The indictment alleges that, beginning in January 2012, Hester sold investment contracts for a “Private Placement Funding Agreement” and a “Standby Letter of Credit” to a local church in Tuscaloosa, Alabama. Hester misrepresented to the church that he could invest their money in these programs to generate $3,000,000 to fund construction of a new church. Hester convinced the church to appoint him as the finance director, and then obtained two investments from the church, totaling $1,530,000. Hester promised that $1,500,000 of the invested funds would remain in an attorney trust account in the church’s name until the transaction was completed, but they did not. Hester also opened undisclosed accounts in the church’s name over which he was the sole signatory. Hester then used the church’s invested funds to overpay Douglas Mills for services related to the transaction, without informing the church, and spent the church’s funds on Hester’s personal expenses. Neither Hester nor the investment contracts he sold were registered with the ASC, as required by the Alabama Securities Act.

Arizona Man Indicted for Alleged Securities Fraud in Tuscaloosa County

H. Wayne Nix — Wed, 29 Jun 2016 18:18:43 +0000

MONTGOMERY, ALABAMA (June 28, 2016) Lyn Head, District Attorney for the 6th Judicial Circuit, Tuscaloosa County, Alabama; and Joseph Borg, Director of the Alabama Securities Commission (ASC) announced that on June 24, 2016, James Friend Liebes, of Paradise Valley, Arizona was arrested by the Maricopa County Sheriff’s Office for alleged violations of the Alabama Securities Act, based on an arrest warrant issued after the April 2016 Tuscaloosa County Grand Jury returned a three-count indictment. Liebes is currently being held in the Maricopa County Jail in Arizona, awaiting extradition to Alabama.

The indictment charges Liebes with one count of Sale of Securities by an Unregistered Agent; which is a Class C felony, punishable by not more than 10 years or less than 1 year and 1 day and a fine of not more than $15,000 per charge, upon conviction. Additionally, the indictment charges Liebes with two counts of Fraud in Connection with the Sale of Securities for making untrue statements of, or omitting to state, material facts to an investor; and for engaging in an act, practice or course of business which operates as a fraud or deceit upon an investor. Each of the securities fraud charges are Class B felonies, punishable by not more than 20 years or less than 2 years imprisonment and a fine of not more than $30,000 per charge, upon conviction.

The indictment alleges that Liebes told an Alabama investor that he owned and could sell shares of stock in Careview Communications, Inc. to the investor. Liebes obtained $39,683.00 from the investor in exchange for 39,683 shares of Careview stock, beginning in June 2011. Liebes never gave the shares of stock to the investor, and, in fact, did not own any Careview stock. Liebes only owned warrants to obtain the stock. Liebes assigned those warrants to another third party instead of tendering them to the investor. Further, Liebes stated that he would transfer to the investor 7,000 shares of stock in Lifelock, Inc. as repayment for the investment, but those shares were never given to the investor. Neither Liebes nor the corporation he used was registered with the ASC as a dealer or agent of securities in Alabama, as required by the Alabama Securities Act. Liebes did not inform the investor that he was not properly registered as a dealer or agent in Alabama. The funds obtained from the investor were not invested, but used by Liebes for personal expenses.

ASC Director, Joseph Borg, said, “The Alabama Securities Commission extends its appreciation to the Sheriff and staff of the Maricopa County, Arizona Sheriff’s Office for their valuable assistance in arresting Liebes.”

Firm Agrees to Return Alabama Investors’ Money for Inappropriate Real Estate Investment Sales

Staff — Wed, 18 May 2016 20:50:04 +0000

MONTGOMERY– Joseph Borg, Director of the Alabama Securities Commission (ASC) announced the finalization of a Consent Order with LPL Financial, LLC, a Boston, Massachusetts-based investment firm, in connection with an investigation of the firm’s sales transactions of non-traded Real Estate Investment Trusts (REITs) to Alabama investors. ASC, together with state securities regulators from multiple jurisdictions, conducted a coordinated investigation of LPL Financial to determine whether non-traded REIT sales transactions executed by the firm violated the Alabama Securities Act and the firm’s own internal procedures. Sales transactions were examined to determine if transactions were made in excess of the prospectus standards of the specific REIT, were within the state concentration limit, whether the firm failed to implement an adequate supervisory system regarding the sale of non-traded REITs, and whether the firm failed to enforce its written procedures regarding said sales.

LPL Financial cooperated with the ASC and agreed to offer rescission on all sales of non-traded REITs executed between January 1, 2008 through December 31, 2013 that were made in violation of firm policy or prospectus standards. LPL also agreed to create a Claim Team to assist Alabama investors with LPL’s remediation procedures relevant to the settlement. The Alabama Consent Order requires LPL to offer to pay Alabama investors a total of $737,356.01. Offering letters are being sent to those Alabamians affected. Investors must follow the instructions for accepting the offer, as described within the letter, to claim their share of the settlement. A toll-free number (855-860-4878) will be available once the letters are sent to investors.

“Individual investors should always be cautious when considering specialized products like non-traded REITs,” said ASC Director Borg. “These products, while legal and useful in the right financial circumstances, can also carry significant liquidity risk that may not be suitable for many ‘main street’ investors’ long-term financial circumstances. This Consent Order is a culmination of hard work by many states’ regulators on behalf of investors and exemplifies the important investor protection role the ASC serves to safeguard our citizens through fair regulation and enforcement.”